The last few weeks have seen huge civil and political unrest in Ukraine’s capital city, Kiev, which culminated in the loss of nearly hundred lives by 20th February, as people protested against corrupt politicians and asked for a return to democracy, stability and growth. Some stability has returned since then, and yields on Ukrainian government Eurobonds have dropped following a peace agreement between the government and opposition last Friday. The US, EU and IMF have welcomed these changes and offered financial aid.
The impact on agriculture over this period was very limited. Key grain and oilseeds producing regions, as well as export infrastructure, are far removed from the conflict zones. And the railway system, which is the main export channel from inland warehouses, worked without significant interruptions. We believe that Ukraine’s currency devaluation caused by political crisis will favour higher agricultural exports in the short run. However, higher inflation and rising input costs will mitigate this effect longer term, and we expect Ukraine’s grain production to fall in 2014/15.
David Llewellyn-Smith is Chief Strategist at the MB Fund and MB Super. David is the founding publisher and editor of MacroBusiness and was the founding publisher and global economy editor of The Diplomat, the Asia Pacific’s leading geo-politics and economics portal.
He is also a former gold trader and economic commentator at The Sydney Morning Herald, The Age, the ABC and Business Spectator. He is the co-author of The Great Crash of 2008 with Ross Garnaut and was the editor of the second Garnaut Climate Change Review.
